Yes, you're missing that management gets to choose the "lockout period" before existing shareholders can cash out. Usually, management imposes a 6 month lockout period but exempts management (i.e., board or executives)
Mr. Zuck is management at Facebook.
As for the taxes, you're thinking of the imputed income from exercising options at below the market price of the shares when exercised (i.e., an option to buy a $10 share of PublicCo for only $2 is $8 in imputed income b/c you could then immediately sell the shares for $8 in gains).
It's the underwriters of the IPO that impose the lockout periods, not management. The lockouts apply to all pre-IPO shareholders (excluding shares explicitly included as part of the offering).
Lockouts may also include provisions that any early release granted to management or dominant shareholders must also be granted to all other parties on equal terms; that was true of the one lockout agreement I was subject to.
And management chooses the underwriters, who therefore will conform their requirements to management's demands, as they have here.
Underwriters frequently try to impose lockouts, but its the management who actually sets the terms, which is why some lockouts are as short as 3 months while others are as long as 9 months. There is no requirement that the lockouts apply equally to management/dominant shareholders and other shareholders, though management frequently accept such restrictions b/c its not usually worth the cost to carve out such an exception.
Mr. Zuck is management at Facebook.
As for the taxes, you're thinking of the imputed income from exercising options at below the market price of the shares when exercised (i.e., an option to buy a $10 share of PublicCo for only $2 is $8 in imputed income b/c you could then immediately sell the shares for $8 in gains).